Note 5.Income Taxes

Deferred income taxes are determined based upon differences between financial reporting and income tax bases of assets and liabilities and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to reverse. The Company recognizes any interest and penalties to unrecognized tax benefits as a component of income tax expense.

No federal current or deferred income taxes were recorded for the years ended December 31, 2014 and 2013, as the Company's income tax benefits were fully offset by a corresponding increase to the valuation allowance against its net deferred income tax assets.

The Tax Reform Act of 1986 limits the annual utilization of net operating loss and tax credit carry forwards, following an ownership change of the Company. Note that as a result of the Company's equity financings in recent years, the Company underwent changes in ownership for purposes of the Tax Reform Act. Pursuant to Sections 382 and 383 of the Internal Revenue Code, annual use of any of the Company's net operating loss carry forwards may be limited if cumulative changes in ownership of more than 50% occur during any three year period.

At December 31, 2014 and 2013, the Company had federal and state net operating loss carry forwards of $410,000 and $297,000, respectively, available to offset future taxable income. These net operating loss carry forwards will expire in varying amounts beginning in 2023 through 2034. At December 31, 2014 and 2013, the Company had federal capital loss carry forwards of $2,000 available to offset future taxable gains. A capital loss carry forward expired on December 31, 2013.

The components of income tax provision (benefit) are as follows:

	December 31,
	2014			2013
Current income taxes:
Federal	$	--		$	--
State		--			--
Total current income taxes		--			--
Deferred income taxes		42,801			(1,687,209	)
Change in valuation allowance		(42,801	)		1,687,209
Provision (benefit) for income taxes	$	--		$	--

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's net deferred income taxes are as follows:

	December 31,
	2014			2013
Current deferred income tax assets	$	--		$	--

Noncurrent deferred income tax assets:
Net operating loss carryover difference		158,448			114,759
Stock option compensation		42,338			42,338
Unrealized losses on marketable securities		--			1,115
		200,786			158,212
Noncurrent deferred income tax liabilities:
Depreciation		--			(227	)
Valuation allowance		(200,786	)		(157,985	)
	$	--		$	--

Due to uncertainty surrounding realization of the deferred income tax assets in future periods, the Company has recorded a 100% valuation allowance against its net deferred tax assets. If it is determined in the future that it is more likely than not that the deferred income tax assets are realizable, the valuation allowance will be reduced.

The reconciliation of the provision for income taxes for the years ended December 31, 2014 and 2013, and the amount computed by applying the U. S, Federal statutory income tax rate to net loss is as follows:

	December 31,
	2014			2013
Tax provision (benefit) at statutory rate	$	(37,739	)		--
State taxes, net of federal effect		(5,062	)		--
Expiration capital loss carry forward		--			1,689,934
Other, net		--			(2,725	)
Change of valuation allowance		42,801			(1,687,209	)
Effective income provision (benefit)	$	--		$	--